7035-02
ORDINANCE NO. 7035-02
AN ORDINANCE OF THE CITY OF CLEARWATER,
FLORIDA, RELATING TO THE CITY OF CLEARWATER
FIREFIGHTERS' SUPPLEMENTAL TRUST FUND,
AMENDING CHAPTER 2, ADMINISTRATION, DIVISION 4,
FIREFIGHTERS PENSION PLANS, SUBDIVISION III,
SUPPLEMENTARY PENSION AND RETIREMENT PLAN;
AMENDING SECTION 2.441, DEFINITIONS, TO AMEND
THE DEFINITIONS OF "COMPENSATION" AND "HIGHLY
COMPENSATED EMPLOYEE"; AMENDING SECTION 2.447,
ALLOCA TIONS OF CONTRIBUTIONS; AME~1)ING
SECTION 2.451, DIRECT TRANSFER OF ELIGIBLE
ROLLOVER DISTRIBUTIONS; PROVIDING FOR
SEVERABILITY; REPEALING ALL ORDINANCES IN
CONFLICT AND PROVIDING AN EFFECTIVE DATE.
BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF
CLEARWATER, FLORIDA:
SECTION 1: That Chapter 2, Administration, Division 4, Firefighters Pension Plans,
Subdivision III, Supplementary Pension and Retirement Plan, is hereby amended by amending
Sections 2.441, Definitions, to amend the definitions of Compensation and Highly compensated
employee, to read as follows:
Compensation shall mean the regular salaries and wages, bonuses and overtime pay paid by
the employer during the plan year reportable as W-2 wages for federal income tax withholding
purposes, employee contributions designated as employer contributions under section 414(h) of the
code, and elective contributions made during the plan year on behalf of a participant to a plan
described in section 125 or 457 of the Code, but shall not include any other type of cash or non-cash
remuneration, including, but not limited to disability payments, amounts paid by the employer to a
plan described in section 125 or 457 of the Code, credits or benefits under this plan, any amount
contributed to any pension, employee welfare, life insurance or health insurance plan or arrangement,
or any other fringe benefits, welfare benefits or deferred compensation.
(1) No compensation in excess of the $150,000.00 $200.000.00 limit under section
401(a)(17) of the Code (adjusted under such regulations as may be issued by the Secretary of the
Treasury) shall be taken into account for any employee. If a plan year consists of fewer than 12
months, the compensation limit will be multiplied by a fraction, the numerator of which is the
number of months in the plan year, and the denominator of which is 12.
(2) For purposes of determining whether compensation exceeds the limit under section
40 1 (a)(17) of the Code, ifany employee is a family member ofa highly compensated employee who
is one of the ten highly compensated employees paid the greatest amount of compensation during
the plan year, then such family member shall not be considered as a separate employee and any
compensation paid to such family member shall be treated as if it were paid to or on behalf of the
related highly compensated employee.
Highly compensated employee shall mean:
(l)(a) Any employee during the plan year or the immediately preceding plan year whose
section 415 compensation was more than $75,000.00 $80.000.00 (adjusted under
such regulations as may be issued by the secretary of the treasury); or
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Ordinance No. 7035-02
VvllOSC, s~ction 415 compensation ~aSlllore than $50,000.00 (adjusted undcr such
regulations as may be issued by the secretary of the treasury), and Who was a
member of the "top paid group"; provided, that as used herein, "top paid group"
shall mean all employees who are in the top 20 percent of the employer's work
force on the basis of section 415 compensation paid during the year; provided,
further, that for purposes of determining the number of employees in the top paid
group, employees described in section 414( q)(8) of the Code shall be excluded.
(2) In determining who is a highly compensated employee, employees who are
nonresident aliens and who receive no earned income (within the meaning of section 91 1 (d)(2)
of the Code) from the employer constituting United States source income (within the meaning
of section 86 1 (a)(3) of the Code) shall not be treated as employees.
(b)
(3) For purposes of this paragraph, the determination of section 415 compensation
shall be based only on section 415 compensation that is actually paid and shall be made by
including elective or salary reduction contributions to a plan described in section 125 of the code,
a plan described in section 40l(k) of the Code or a plan described in section 403(b) ofthe Code.
(4) The term "highly compensated employee" shall also mean any former employee
who separated from service (or was deemed to have separated from service) prior to the plan
year, performs no service for the employer during the plan year, and was an actively employed
highly compensated employee in the separation year or any plan year ending on or after the date
the employee attained age 55.
(5) For purposes of determining whether an employee is a highly compensated
employee, if any employee is a family member of a highly compensated employee who is one
of the ten highly compensated employees paid the greater amount of compensation during the
plan year, then such family member shall not be considered as a separate employee and any
compensation paid to such family member (and any applicable benefit or contribution on behalf
of such family member) shall be treated as if it were paid to or on behalf of the related highly
compensated employee.
SECTION 2: That Chapter 2, Administration, Division 4, Firefighters Pension Plans,
Subdivision III, Supplementary Pension and Retirement Plan, is hereby amended by amending
Sections 2.447, Allocations of contributions, subsection 6, Maximum additions, and subsection 7,
Participation in both defined contribution and defined benefit plans, to read as follows:
(6) Maximum additions. Notwithstanding any other provision of this section 2.447,
the "annual additions" to a participant's account for any limitation year shall not exceed the
maximum permissible amount, which shall be the lesser of: (i) $30,000.00 $40~000.00, or, if
greater, one-fourth of the defined benefit dollar limitation set forth in section 4l5(b)(1) of the
Code as in effect for the limitation year; or (ii) 25 percent of the participant's compensation for
the limitation year.
If there is a short limitation year because ofa change in limitation year, the trustee will
multiply the $30,000.00 $40.000.00 limitation (or larger limitation) by the following fraction:
Number of months in the short year/12
The term "annual additions" means the amount allocated to a participant's account during
the limitation year that is comprised of:
(a) The allocable share of the employer contribution for the limitation year;
(b) The allocable share of forfeitures for the limitation year;
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Ordinance No. 7035-02
(c) All employee contributions made during the limitation year.
If the annual additions exceed the limitation described above, the annual additions to the
participant's account shall be reduced by a corrective adjustment made in the following order of
precedence:
(a)
(b)
By allocating and reallocating under subsections (b) and section 2.449, employer
contributions and forfeitures for the plan year to the employer contribution
accounts of those participants to whom the limitations of this section do not apply
for the limitation year but only to the extent that such allocations or reallocations
do not cause the annual additions to any participant's accounts to exceed the
limitations of this section.
To the extent there remains an amount that cannot be allocated under
subparagraph (1) above, such remaining amount shall be held in a "suspense
account" as a forfeiture and shall be held therein until the next succeeding date or
dates that forfeitures are allocated. Suspense accounts shall not share in trust
income under subsection (3). In the event of termination of the plan, the suspense
account shall be allocated and reallocated to the employer contribution accounts
of the participants under the formula provided in subsection (2), but shall revert
to the employer in the event that it cannot be fully allocated to the employer
contribution account of any participant without violating the provisions of this
section.
If, at any time, an amount is held in the suspense account, the employer shall not
contribute any amount to the plan that would cause an allocation to the suspense account as of
the last day of the limitation year. If the employer makes a contribution before the last day of
the limitation year, the employer shall not make any contribution that would exceed an amount
that would cause an allocation to the suspense account if the date of the contribution were the
last day of the limitation year.
(7) Participation in both defined contribution and defined benefits plans. In any case
in which an individual is a participant (or has been a participant) in both a defined benefit plan
or plans and a defined contribution plan or benefits under the defined benefit plan shall be
reduced to the extent necessary to prevent the sum of the defined benefit plan fraction and the
defined contribution plan fraction, computed as of the close of the limitation year from exceeding
1.0. '
For purposes of this subsection (7), the defined benefit plan fraction is:
The sum of the projected annual benefit of the participant under all defined
benefit plans (whether or not terminated) maintained by the employer. The lesser
of (i) 125 percent of the dollar limitation in effect under code section
415(b)(1)(A) for the limitation year; or (ii) 140 percent of his average
compensation for his high three consecutive calendar years of service.
If the employee was a participant in one or more defined benefit plans maintained by the
employer which were in existence on July 1, 1982, the denominator of this fraction will not be
less than 125 percent of the sum ofthe annual benefits under such plans which the employee had
accrued as of the end of the 1982 limitation year (the last limitation year beginning before
September 1, 1983), or, iflater, June 30, 1983. The preceding sentence only applies if the
defined benefit plans individually and in the aggregate satisfied the requirements of code section
415 as in effect at the end of the 1982 limitation year. For purposes of this paragraph, a master
or prototype plan with an opinion letter issued before January 1, 1983 shall be treated as a plan
in existence on July 1, 1982.
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Ordinance No. 7035-02
For purposes of this subsection (7), the defined contribution plan fraction is:
The sum of the annual additions (determined as of the close of the limitation year) to the
participant's account under all defined contribution plans (whether or not terminated)
maintained by the employer for the current and all prior limitation years (including the
annual additions attributable to the participant's employee contributions to this plan and
all other defined contribution or defined benefit plans, whether or not terminated,
maintained by the employer.)
The sum of the lesser of the following amounts determined for the limitation year and for
each prior limitation year of service with the employer: (i) 125 percent of the dollar limitation
in effect under section 415(c)(1)(A) of the code for the limitation year (determined without
regard to special dollar limitations for employee stock ownership plans); or, (ii) 35 percent of
the participant's compensation for the limitation year.
If the employee was a participant in one or more defined contribution plans maintained
by the employer which were in existence on July 1, 1982, the trustees will adjust the numerator
of this fraction if the sum of this fraction and the defined benefit plan fraction otherwise would
exceed 1.0 under the terms of this plan. Under the adjustment, the trustees will subtract
permanently an amount equal to the product of: (1) the excess of the sum of the fractions over
1.0, times (2) the denominator of this fraction, from the numerator of this fraction. The trustees
shall calculate the adjustment using the fractions as they would be computed under this section
as of the end of the 1982 limitation year (the last limitation year beginning before September 1,
1983), or iflater, June 30, 1983. The trustees shall make the same adjustment as of the end of
the 1983 limitation year (the last limitation year beginning before January 1, 1984) if the sum
of the fractions exceed 1.0 because of accruals or additions that were made before the limitations
of this article became effective to any plans of the employer in existence on July 1, 1982. The
trustees also may use any transitional rules provided by law which are applicable in computing
the participant's defined contribution plan fraction. For purposes of this paragraph, a master or
prototype plan with an opinion letter issued before January 1, 1983, which was adopted by the
employer on or before June 30, 1983, shall be treated as a plan in existence on July 1, 1982.
For purposes of this subsection (7) and subsection (6), the following terms shall have the
meanings shown below:
The term "compensation" shall mean a participant's wages, salaries, and fees for services
and other amounts received for services actually rendered in the course of employment with the
employer maintaining the plan, but excluding the following: .
(a) Employer contributions to a plan of deferred compensation which are not
includable in the employee's gross income for the taxable year in which
contributed, or employer contributions under a simplified employee pension plan
to the extent such contributions are deductible by the employee, or any
distributions from a plan of deferred compensation;
(b) Amounts Ic.alized nom the exelcise of a non-qualific.d stock option, 01 when
IcstIicted stock (01 pIOpelty) held by the employee eithcI becomes flCcly
tIansfclabk 01 is no lon~el subjec.t to a substantial lisk of fOlfc.itme,
(c) Amounts lc.alized fIOm the sak, exchan~c. 01 othel disposition of stock acquilc.d
un del a qualified stock option, and
fd]au Other amounts which received special tax benefits, or contributions made by the
employer (whether or not under a salary reduction agreement) towards the
purchase of an annuity described in section 403(b) of the Code (whether or not
the amounts are actually excludable from the gross income of the employee).
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Ordinance No. 7035-02
For the purposes of applying the limitations of this division, compensation for a limitation
year is the compensation actually paid or includable in gross income during such year unless
otherwise specified in writing by the employer.
The term "defined benefit plan" shall mean a retirement plan that does not provide for
individual accounts for employer contributions. The trustees shall treat all defined benefit plans
(whether or not terminated) maintained by the employer as a single plan and the trustees shall
treat all defined contribution plans (whether or not terminated) maintained by the employer a
single plan.
The term "projected annual benefit" shall mean a participant's annual benefit (adjusted
to an actuarially equivalent straight life annuity if the plan expresses such benefit in a form other
than a straight life annuity or qualified joint and survivor annuity) under the defined benefit plan
provided by employer contributions based on the assumptions that: (i) the participant will
continue employment until his normal retirement age as stated in the defined benefit plan, (or
current age, if later); (ii) the participant's compensation for the current limitation year will
continue at the same rate as in effect for the limitation year under consideration until his normal
retirement age; and, (iii) all other relevant factors used to determine benefits under the defined
benefit plan will remain constant as of the current limitation year for all future limitation years.
The term "limitation year" shall be the same as the plan year.
The term "limitation year of service" shall mean a plan year during which a participant
completes a complete plan year of service.
If the. plan satisfied the applicabk rcquire.ments of section 415 of the code as in effe.c.t fOl
all limitation ye.ars bc.ginlling beforc January 1, 1987, an amount shall be. subtrac.tc.d from the
numcrator of the de.fined conttibution plail fraction (not e.xccc.ding such nume.ratOl) as prescribed
by the se.crctary of the. treasury so that the. sum of the de.fined bendit plan fraction and defined
contribution plan frac.tion and ddine.d contribution plan frac.tion compute.d unde.r section
415(e)(I) of the. codc docs not e.xce.cd 1.0 for such limitation year. ' This shall only be c.ffecti\ic
ul1til January 1,2000.
SECTION 3: That Chapter 2, Administration, Division 4, Firefighters Pension Plans,
Subdivision III, Supplementary Pension and Retirement Plan, is hereby amended by amending
Sections 2.451, Direct transfer of eligible rollover distributions, to read as follows:
Sec. 2.451. Direct transfer of eligible rollover distributions.
(1) Rollover distributions.
uu General. This section applies to distributions made on or after January 1, t993
2002. Notwithstanding any provision of the system to the contrary that would
otheIWise limit a distributee's election under this section, a distributee may elect, at
the time and in the manner prescribed by the board, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
tz1(b} Definitions.
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Eligible rollover distribution: An eligible rollover distribution is any
distribution of all or any portion of the balance to the credit of the distributee,
except that an eligible rollover distribution does not include any distribution
that is one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the distributee and
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Ordinance No. 7035-02
Distributee: A distributee includes an employee or former employee. In
addition, the employee's or former employee's surviving spouse is a
distributee with regard to the interest of the spouse.
Direct rollover: A direct rollover is a payment by the plan to the eligible
retirement plan specified by the distributee.
SECTION 4: All Ordinances or parts of Ordinances in conflict herewith be and the same
are hereby repealed.
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the distributee's designated beneficiary, or for a specified period often years
or more; any distribution to the extent such distribution is required under
section 401(a)(9) of the Code; and the portion of any distribution that is not
includable in gross income. Any portion of any distribution which would be
includible in gross income will be an eligible rollover distribution if the
distribution is made to an individual retirement account described in section
408(a). to an individual retirement annuity described in section 408(b) or to
a qualified defined contribution plan described in section 401(a) or 403(a)
that agrees to separately account for amounts so transferred. including
separately accounting for the portion of such distribution which is includible
in gross income and the portion of such distribution which is not so
includible.
Eligible retirement plan: An eligible retirement plan is an individual
retirement account described in section 408(a) of the Code, an individual
retirement annuity described in section 408(b) of the Code, an annuity plan
described in section 403(a) of the code, an eligible deferred compensation
plan described in section 457(b) of the code which is maintained by an
eligible employer described in section 457(e)(1)(A) of the code and which
agrees to separately account for amounts transferred into such plan from this
plan. an annuity contract described in section 403(b) of the code. or a
qualified trust described in section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. IIOWc.vel, ill the. case. of an c.ligibIc.
10llover distIibution to the SuI \living spouse, au eligible. letiJ.clllent plan is an
indi \I idualle.tilem.::.ut account 01 indi v iduallGtiJ.GJ.l1c.nt alUlaity This definition
shall apply in the case of an eligible rollover distribution to the surviving
spouse.
SECTION 5: If any section, subsection, sentence, clause, phrase of this ordinance, or the
particular application thereof shall be held invalid by any court, administrative agency, or other body
with appropriate jurisdiction, the remaining section, subsection, sentences, clauses, or phrases under
application shall not be affected thereby.
SECTION 6: That this Ordinance shall become effective upon its adoption.
PASSED ON FIRST READING
PASSED ON SECOND AND FINAL
READING AND ADOPTED
September 5, 2002
September 19, 2002
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Ordinance No. 7035-02
Approved as to form:
J1 t41
Pamela K. AKin
City Attorney
Attest:
bm\clear\fire\07 -15-02.ord
Ordinance No. 7035-02